Sunday Island Editorial

Some frightening numbers

09 October 2016

Last week’s newspapers were crowded with reports on the mind-boggling penalties loss-loaded SriLankan Airlines will pay for the cancellation of the leases of four Airbus A350 aircraft. An AFP report we run today quoted official sources placing the figure at around US dollars 115 million. This obviously is not small beer by any consideration. The present management of the airline wishes to concentrate on its regional short haul destinations and discontinue several long haul flights to Europe. The popular London flights offering the convenience of a non-stop connection against cheaper fares offered by Middle Eastern competitors involving a stopover at their hubs will continue, presumably because they are viable.

There is no doubt that particularly Airlanka, the predecessor of the present national carrier, was largely responsible for bringing modern aircraft and airline technology into this country. The fact that we had our own airline when the July 1983 riots blackened our image internationally, and many foreign airlines flying here discontinued services, enabled us to ensure the survival of our tourist industry on which substantial investment had been made over a long period of time. While the decision of airlines that had long flown here to stop coming to Colombo was a heavy blow to tourism, the fact that we had our own airline prevented us from being totally isolated. Although five-star hotel rooms here became available for as little as 20 and 30 dollars in those dark days, tourism survived and is today demonstrating a growth momentum identifying it as among the biggest economic drivers of the times.

The technology that Airlanka brought into the country and the experience gained by thousands of Lankans privileged to work for the airline enabled the acquisition of skills and abilities that have enabled a very large number of our people to find jobs not only in this country but overseas. These ranged from stewards and stewardesses, aircraft engineers and mechanics, ticketing and catering staff and many more. From a backward airline boasting it was accident free in a small but well located country, we were able to take a great leap forward towards modernization thanks to the decision to set up that airline, utilizing the goodwill that the J.R. Jayewardene government was able to mobilize in Singapore. This enabled the harnessing of the proven expertise of Singapore Airlines to develop Airlanka and we were able to make remarkable progress. Obviously there was no free lunch and Singapore Airlines also wanted to take advantage of the relationship. Eventually there was a parting of the ways with an arrangement with Emirates that came in as an equity partner and manager to follow.

The former president did not do himself any good by appointing his brother-in-law, a former planter, as Chairman of SriLankan Airlines; likewise the setting up of Mihin Lanka, bearing a diminutive of his name, without any kind of commercial or financial rationale. The public perception, for valid reasons, was that an airline spending billion on re-fleeting was a hotbed of corruption. Buying aircraft involving the expenditure of the kind of bucks that were being spent for the purpose obviously opened doors for kickbacks and commissions and most people had no doubt that big money was being made on procurements. Tight controls that are necessary in these circumstances were nowhere in evidence. There were strong doubts on whether the country was getting the best deal for its money. Having sold a stake in the airline to Emirates, the inflated egos of the powers that were, aided and abetted by sycophants who only muttered ehei hamaduruwane whatever the royal desire however stupid, an arrangement that was profitable to both partners was terminated. Emirates obviously saw prospects in the company as it increased its stake, albeit modestly, by buying employee shares granted free, gratis and for nothing to the airline’s staff, from whoever was willing to sell. The end came after the Emirates appointed CEO was kicked out for refusing to bounce paid passengers to accommodate a royal retinue on a flight.

The new regime, typically, appointed the one man Weliamuna Committee to find out what has been going on in the airline. There was a lot of whistle blowing in response to its invitation for information and the committee, whose work was necessarily not as in-depth as the situation warranted on account of a tight timeline among other reasons, came up with a report. But even such a preliminary investigation surfaced a lot of material, some of it salacious, for further inquiry. But nothing seems to have been done since with no bloodhounds unleashed to get at the culprits. The government has sensibly come round to the viewpoint that no more public funds can be poured into a bottomless pit and is looking for a partner to take a 49 percent stake in the airline with the buyer given management control. This is similar to the previous arrangement with Emirates for the termination of which President Mahinda Rajapaksa has not been brought to account.

Any new arrangement will obviously necessitate the government (read taxpayer) assuming responsibility for the airline’s existing debt or a big chunk thereof. There was a Reuter report last week that about half a dozen parties are interested suggesting that despite the depressing figures that emerged last week the airline still offers some value. After a previous management downsized its payroll to reasonable proportions through an expensive voluntary retirement scheme, a new government merrily added more recruits to the airline bloating the numbers above the previous level! SriLankan can be properly run as has been previously demonstrated by a board headed by a respected and capable civil servant that included such personalities like the late Lal Jayasundera of Hayleys. But travel perks attract freeloaders appointed by political patrons to the board and it is unlikely that the political powers that are have the backbone to do away with such pernicious practices.